Pericles American Business and Legal Education
    MBA Advising TOEFL GMAT GRE LL.M. Program Legal Writing Legal English
 

THE BUILD-OUT OF THE BUSINESS SCHOOL INDUSTRY
By Dominic Basulto

Business schools are, quite simply, enormously profitable businesses. In response to far-reaching changes occurring within the world economy, clients (students, current managers, and recruiting corporations) of these B-schools have increasingly challenged the traditional role of the MBA. This has inspired a remarkable build-out of the B-school industry, in terms of revenues, new delivery vehicles for revamped program offerings, and new worldwide locations. Executive education, online internet delivery, and customized in-house courses for corporate managers have contributed to unprecedented revenue growth over the most recent five-year period at leading institutions such as London Business School (123%), Harvard (124%), Wharton (151%), Kellogg (158%), and MIT Sloan (303%).

While the traditional full-time MBA remains the undisputed first choice of aspiring career managers, the hype and early development of the New Economy in the USA has meant a wholesale reconsideration of what the MBA should be. After all, the MBA is merely content that can be sliced, diced or otherwise configured to meet any demands of corporations and aspiring managers anywhere in the world.

Three key factors can be isolated in moving the MBA in new directions: (1) the expansion of the Internet economy and rapid technological change (2) globalization and (3) the rise of non-traditional MBA providers. All of these factors give applicants new possibilities to consider when applying to B-school.


#1: EXPANSION OF THE INTERNET ECONOMY & RAPID TECHNOLOGICAL CHANGE

The expansion of the New Economy and the realization that :"the Internet changes everything" has forced B-schools to reconsider their course offerings. The dean of Columbia Business School remarked that the Internet "is the instrument for democratizing intellectual capital"- no longer should only the elite have access to managerial know-how. Moreover, technological advances have meant that B-schools can grow revenues and employ their assets more efficiently through a combination of new media and Internet content delivery.

Much as traditional retailing has pushed mainstay corporations of the Old Economy to shift from "brick and mortar" to "click and order," so have B-schools been prodded to provide content over the Internet and via videoconferencing. Wharton has introduced its Wharton Direct program, which disseminates video and audio links to coursework via satellite and computer; Duke Fuqua has offered an online Executive MBA since 1996; and Arizona has pioneered a teleconferencing program which provides distance learning to Silicon Valley (and also grants students equity stakes in the telecommunications company providing the links).

B-schools have recognized that the New Economy maxim- "moving at Internet speed" applies just as well to academic course content. Elite institutions such as Harvard, Wharton, and INSEAD are expected to remain ahead of the curve, not follow slavishly behind emerging trends. Such B-schools have revamped course offerings to include e-commerce savvy. Kellogg now offers a technology and e-commerce major and Wharton has structured an e-commerce management curriculum, while other B-schools have moved into short-term executive education courses taught by young entrepreneurs. Harvard has recently announced its plan to open a Silicon Valley open-enrollment executive education center in order to remain close to the heartbeat of the e-commerce era, and in 1999, Columbia, Chicago, Stanford and London School of Economics actually partnered with a start-up company, UNext.com, to offer immediate web distribution of material.


#2: GLOBALIZATION

One need only look at the education section of an international business publication such as The Economist or the Financial Times to see the broad diffusion and internationalization of B-school programs, ranging the worldwide spectrum across the USA, Europe, and Asia. There is no doubt that the business school model has moved beyond the American and European context. In no small part, technology has aided this diffusion of the MBA brands abroad. Participants in new regions often combine on-site meetings and classes with internet-based communication. These programs are more than merely a "distance learning" program- they provide constant in-person contact for busy executives with worldwide travel schedules. London Business School and Columbia Business School have announced a joint 20-month executive MBA program (where participants alternate meetings in New York and London) and Duke Fuqua has announced a new on-site presence in Frankfurt. In an extreme version of this concept, the Hong Kong-based Internet learning company NextEd.com has introduced real-time business school content from three Australian B-schools to the Asian continent.

Of course, student exchange programs between business schools have existed for quite some time. For instance, students at London Business School are able to coordinate a semester at one of 30 B-schools on one of four continents. The next step in this development has been a new dedication to capital expenditure, by the construction of satellite campuses on different continents. INSEAD has responded to demand for its European MBA by opening a new campus in Singapore to attract Asian managers, and U.S. B-schools have mulled over establishing both European and Asian campuses. Of course, Europe is the biggest market to crack for US B-schools. Chicago was an early mover, setting up a campus in Barcelona.


#3: RISE OF NON-TRADITIONAL MBA PROVIDERS

Third parties- "non B-school" B-schools- have encroached on the formerly sacrosanct territories of traditional leaders such as Harvard and Wharton. A mix of management consultancies, think tanks, in-house corporate training programs, and even media companies such as FT Knowledge (which owns the Financial Times) have branched into providing MBA content to managers. Fans of Kaplan test preparation will be heartened by news that Kaplan has introduced plans for an online MBA by the year 2001. B-schools have been challenged since these third-party providers can react quicker to a rapidly changing world by putting content online immediately and by reaching a global audience rather than a limited cadre in one city.

In the field of executive education, management consultants and web-based learning companies have proven to be worthy rivals for the ivory tower academics. In fact, current ratings of executive business education programs by Business Week now includes private and non-profit companies in addition to B-schools. How effective are these upstarts? In the most recent Business Week survey of executive education, only 39% of the respondents indicated that B-schools were the most effective providers of executive education. Market share has been seized by independent consultants such as JMW Consultants and the Center for Creative Leadership (#7 in the rankings). As a counteroffensive, some top B-schools have spun-off their executive education programs into strictly for-profit entities (Duke Fuqua has created Duke Corporate Education, Inc. and Cornell Johnson has created eCornell), with talks of going public via an IPO. Others have been more sympathetic to customized non-degree executive education tailored to a specific company's needs.

Traditionally, only high-potential candidates- the future executive stars- from a corporation would receive dedicated executive business training. The expansion of program content and timing has meant the delivery of the MBA product to all layers of the corporation- not just high-potential future executives. Some leading companies now outsource in-house training to B-schools willing to structure a unique curriculum. For instance, the consultancy McKinsey combines an "in-house mini MBA" with short-term targeted training to junior hires at B-school campuses in Britain and the USA. Dartmouth Tuck's Business Bridge program, which seeks to propagate segments from its well-respected two-year MBA to a mass audience, is part of this trend toward "distributed learning" to top blue-chip companies.


FINAL ADVICE TO APPLICANTS

Obviously, this move towards e-learning and other non-traditional approaches to business school education gives potential students yet more aspects to consider when selecting the "right" MBA program. B-schools that make efficient use of e-learning can offer more flexible programs to their students. For example, applicants who favor a particular B-school for location, reputation, and scholarship availability, but are dissuaded in applying due to weaknesses in a specific aspect of the curriculum, can now address this shortcoming by selecting an "off-the-shelf" solution from one of the new MBA content providers or investigating advantages of a B-school's partnership with an international location.

Another important factor is how well one's style of learning matches that of the B-school to which one is applying. As some institutions experiment with strictly online, paperless classes (even INSEAD has now considered web-based content for foreign managers), the initial acclaim has given way to some dissatisfaction. Without the formal structure of a real classroom, many participants have not seen the hoped-for results.

Applicants must also think about how their potential employers will evaluate non-traditional MBA programs. Some employers, especially in the high-tech industry, think highly of graduates familiar with e-learning methods and a concomitant knowledge of e-commerce. An MBA from a B-school with a progressive reputation gives you also a progressive reputation. Likewise, having international experience looks great on a resume for some multinational corporations. However, other employers may view a year in an exotically-located business school as little more than a holiday abroad.

Finally, remember that attending B-school is just as much an investment as buying stock. Before investing considerable money and time, evaluate the full potential of a particular program. Many analysts on Wall Street have predicted that online-based e-learning and short-term targeted executive education programs are the next high-growth sector. A healthy dose of skepticism is needed: just as some high-tech start-ups have begun to experience extreme market volatility, so might some of the new e-learning programs prove to be nothing more than a flash in the pan. But the very fact that the 800-pound gorilla of the B-school world - Harvard- has entered the online education wars counts for something. Much as companies such as Sony or Coca-Cola or Microsoft benefit from strong brand recognition, so have the best B-schools leveraged their own brands in order to sell a wide selection of products through new channels to an ever-increasing consumer base. So shop around- non-traditional B-school education no longer means non-quality B-school education.

Dominic Basulto is a 1998 graduate of Yale School of Management and currently works as a consultant for Pericles ABLE (American Business and Legal Education) in Moscow. Pericles offers a full MBA advising program.

© ANO Pericles, Moscow, 2000. ANO Pericles, American Business & Legal Education Project, 1st Miusskaya str 22/3 office 310 tel. (495) 649-22-73 info@pericles.ru, www.pericles.ru You may freely print or photocopy this article for any non-commercial purposes provided you do not delete the name of the author and the name and contact information of Pericles American Business & Legal Education Project. If you use this article for your own web site, please link to our site rather than stealing it and reposting it on your own. For any other uses of this article, please contact us for permission. Your comments on this article are welcome.